00:01
So here we're talking about tax incidents, and as soon as i see elastic demand, i want to draw market.
00:07
So i'm going to draw a very elastic demand curve, and i'm going to draw a very inelastic supply curve.
00:12
The two of these things combine, it's not the best straight line there.
00:18
Let's see if i can do a little bit better, a little bit better, is going to yield an initial price of p0.
00:24
Now we're going to have a tax.
00:25
So the tax, say, is going to increase the supply curve, right? supply plus the tax.
00:33
And we can immediately see what happens, right? the price paid is going to be very, very different than the price received, right? the price received is going to be down here.
00:47
So this would be the price received.
00:50
I put a pretty big tax on, maybe two big a tax, and this is going to be the price paid.
00:56
So elastic means that you can change your behavior.
01:03
And that means you can dodge, right? you can dodge.
01:08
You can see that the price paid is barely increased at all, right? because the elastic people change their behavior when the price starts to rise...